It’s almost a year since the European Union raided the offices of several publishers in France, Italy, and Germany, kicking off their own Europe-wide anti-trust investigation – later folding into that probe a similar move by the Competition Authority in the UK to examine the Agency Agreement.

It was also widely reported late last year that a U.S. Justice Department investigation, along similar lines, had commenced.

On top of that, it’s over six months since the law firm of Hagens Berman announced a class action suit against the same five publishers, and Apple, for the (alleged) price-fixing of e-books. (Interestingly, the same firm which launched a similar action against several publishers for the (alleged) chronic under-reporting of e-book royalties to their authors.)

This latter news prompted Scott Turow, President of the Authors Guild, to publish a letter to the Guild’s members. You can read that letter here in full, but any regular reader of the Authors Guild’s blog or Mr. Turow’s public comments on Amazon, e-books, or self-publishing won’t be surprised at its contents.

It’s simply the latest in a series of disingenuous, inaccurate, misguided pronouncements aimed at maintaining the status quo – at any cost.

Scott Turow seems to be desperate to carve out a niche for himself and the Authors Guild on the wrong side of history. Here’s the letter:

Yesterday’s report that the Justice Department may be near filing an antitrust lawsuit against five large trade book publishers and Apple is grim news for everyone who cherishes a rich literary culture.

Except perhaps readers, who have been forced to pay higher e-book prices for the last two years because of this (alleged) price-fixing. I’m also not sure how the Justice Department doing its job by investigating (alleged) criminality threatens our literary culture, but we’ll get to that.

The Justice Department has been investigating whether those publishers colluded in adopting a new model, pioneered by Apple for its sale of iTunes and apps, for selling e-books. Under that model, Apple simply acts as the publisher’s sales agent, with no authority to discount prices.

Here is the relevant quote from Steve Jobs’ authorized biography. “We told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway […] They went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books.'”

We have no way of knowing whether publishers colluded in adopting the agency model for e-book pricing.

Actually, we do have a way of knowing, and as a lawyer, Mr. Turow should really be aware of the process. We can investigate, collect evidence, and, if necessary, file suit, and thrash the whole thing out in a court of law. Which, by the way, is precisely what is happening, and what Mr. Turow is campaigning to prevent. If that sentence was more honest, it would have said “I don’t want to know if publishers colluded to fix prices,” or, “I don’t want to know if publishers broke the law.”

We do know that collusion wasn’t necessary: given the chance, any rational publisher would have leapt at Apple’s offer and clung to it like a life raft. Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open.

Let me get this straight. Amazon’s policy of discounting one product (e-books) was making it uneconomic for physical bookstores, who sell a completely different product (print books), to keep their doors open? Let’s just pause for a moment and ponder the ridiculousness of that statement.

The Agency Agreement is roughly two years old. Two years ago, e-books made up roughly 4% of the market. 96% of the market was print books. And yet somehow Mr. Turow is convinced that Amazon’s policy of discounting e-books is responsible for the trading difficulties of physical bookstores (which, by the way, predate the introduction of the first Kindle).

Just before Amazon introduced the Kindle, it convinced major publishers to break old practices and release books in digital form at the same time they released them as hardcovers.

The key word here is “convinced.” Nobody forced publishers to sell their e-books through Amazon, or to release the e-book at the same time as the hardcover. There was nothing preventing them from doing the exact opposite, if they chose.

Then Amazon dropped its bombshell: as it announced the launch of the Kindle, publishers learned that Amazon would be selling countless frontlist e-books at a loss.

I’m not sure how much of a “bombshell” this really could have been. This practice has been common in print bookselling for a long time (by Amazon, and several other retailers).

This was a game-changer, and not in a good way. Amazon’s predatory pricing would shield it from e-book competitors that lacked Amazon’s deep pockets.

Competitors like the most valuable company in the world, Apple? Or the internet search giant, Google? (Both of whom have far deeper pockets than Amazon.)

Amazon were able to “quickly capture the e-book market” because no such market really existed in 2007, when they introduced the first Kindle (according to the American Association of Publishers, e-books captured 0.6% of the market in 2007).

I remember the launch of the first Kindle. The device was widely mocked. Personally, I couldn’t see the point of it. However, everyone underestimated the demand – even Amazon. That first device sold out in five-and-a-half hours, and it was another five months before Amazon had the Kindle back in stock.

E-books had been around (in one form or another) since the 1970s. E-readers had been around since the 1990s. But the market didn’t really take off until Amazon entered the game.

I don’t know if it was timing (widespread availability of the Internet), luck, or just a reasonable device allied to a great store which was marketed well, but Amazon pretty much created this market. The other big players didn’t see value in it for quite some time.

And, by the way, the publishers’ wrongheaded insistence on DRM did far more to create that walled garden than any format choice by Amazon.

Two years after it introduced the Kindle, Amazon continued to take losses on a deep list of e-book titles, undercutting hardcover sales of the most popular frontlist titles at its brick and mortar competitors. Those losses paid huge dividends. By the end of 2009, Amazon held an estimated 90% of the rapidly growing e-book market.

This is quite disingenuous. Amazon were the only serious player in the market. Sony was there, true, but weren’t doing much; it was hardly a focus for the company. Amazon was pouring everything into the Kindle. They saw it as the future of reading when virtually no-one else did. They bet the farm on it.

Traditional bookstores were shutting down or scaling back. Borders was on its knees. Barnes & Noble had gamely just begun selling its Nook, but it lacked the capital to absorb e-book losses for long.

And now this is completely disingenuous. The launch of the Kindle, and Amazon’s successful foray into the e-book marketplace had nothing to do with the troubles that bookstores were experiencing. Again, according to the American Association of Publishers, e-books captured 3.2% of the market in 2009. Quite frankly, to imply that “Borders was on its knees” because of Amazon’s policy of discounting e-books is intellectual dishonesty of the highest order.

Our concern about bookstores isn’t rooted in sentiment: bookstores are critical to modern bookselling. Marketing studies consistently show that readers are far more adventurous in their choice of books when in a bookstore than when shopping online.

This is a laughable claim. Physical bookstores are, obviously, limited by their physical space, and, by necessity, must restrict the amount of titles they can sell. An online bookseller can have a far greater selection. I’m not sure what studies Mr. Turow is referring to (as he doesn’t link to them), but they bear no relation to reality.

Compare the New York Times bestseller list (or any of your choice) to the Kindle Bestseller list. Honestly, Mr. Turow, which is more adventurous? Which has the same names from the same large publishers reappearing week after week, and which contains books from small publisher and self-publishers who can’t get access to those physical bookstores which you are lionizing (by authors who can’t gain membership to your organization, by the way)?

In bookstores, readers are open to trying new genres and new authors: it’s by far the best way for new works to be discovered.

No it’s not. There are plenty of “new genres” for which publishers have decided there is no commercial appeal, and plenty of old genres that publishers pronounced dead. Authors working in these genres, if they wanted to be read at all, had to pursue deals with smaller, progressive publishers, or self-publish. These authors face an uphill struggle to get into bookstores. I’m not complaining about that, bookstores are entitled to stock what they choose, I’m merely stating how it is. But the fact is, these titles are available in online bookstores, not in physical bookstores. Ergo, the selection of authors and genres and books is far, far greater online.

For those of us who have been fortunate enough to become familiar to large numbers of readers, the disappearance of bookstores is deeply troubling, but it will have little effect on our sales or incomes.

Then why is it troubling? I would suggest that bestsellers like Mr. Turow have a lot to fear from the digital revolution. The path to the bestseller list is a little trickier when you aren’t piled high on the front table, and you have to compete with many, many more titles online.

Like rock bands from the pre-Napster era, established authors can still draw a crowd, if not to a stadium, at least to a virtual shopping cart. For new authors, however, a difficult profession is poised to become much more difficult. The high royalties of direct publishing, for most, are more than offset by drastically smaller markets.

Unlike you, Mr. Turow, I actually am a new author and I can tell you that things got a hell of a lot easier over the last couple of years. Instead of wasting my time sending queries to agents who never read them and don’t bother responding, I’m publishing my own work, reaching readers, and making money. No company has done more to make the self-publishing path viable than Amazon.

The increased viability of this path is the most positive development for authors in recent memory. Even those not keen on the self-publishing path are able to use it as leverage to seek better deals.

Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90% to roughly 60%.

Sigh. At this stage, I don’t know if Mr. Turow is being deliberately disingenuous, willfully ignorant, or just letting his inner Sophist run wild. The claim that the Agency Agreement is responsible for Amazon’s share of the e-book market falling from “about 90% to roughly 60%” is ridiculous.

Here are some other things that happened in the two years since the Agency Agreement came into effect that might have been more responsible for Amazon’s falling market share (I presume Mr. Turow simply forgot about these major developments):

America’s largest bookstore chain entered the e-reader and the e-book market, pushing the e-store and the device across their extensive, nationwide store network to their loyal customer base (Barnes & Noble).

The most valuable corporation in the world, a company six times the worth of Amazon, entered the e-book market (Apple).

A whole plethora of competing devices – e-readers and tablets – were released, including one you might have heard of: the iPad.

It should also be noted that the e-book market is roughly seven times larger today. When you have serious players entering the market, and that market growing so rapidly, it’s natural that the market leader’s share would slip.

Let’s hope the reports are wrong, or that the Justice Department reconsiders. The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition.

The irony indeed “bites hard.” Here we have the spectacle of the head of an organization which is supposed to advocate for authors’ interests, and who is also a lawyer, who is instead advocating that the Justice Department drop its investigation into (alleged) criminality, the result of which has been to increase prices for readers, and harm the sales of those writers of over-priced e-books.

This would be tragic for all of us who value books, and the culture they support.

What’s truly tragic is that Mr. Turow is using his considerable bully pulpit to repeatedly defend the status quo and bash the one company who has done more to allow an increased amount of writers to earn a living than any other – Amazon – a company, it should be noted, that is not implicated in this (alleged) price-fixing ring.

142 Responses to Scott Turow: Wrong About Everything

Every one of your statements is right on, David. I suspect that the Author’s Guild, or at least its president, doesn’t consider indie authors to be real authors, worthy of his and his organization’s support (we already know he doesn’t, since indie authors aren’t allowed in). But even excluding indie authors, supporting the practices of big publishers–and not even wanting to know if they are illegal–does a disservice to the members of his organization, who get less money, lower royalties, and fewer opportunities for people to read their books through their publishers’ (alleged) collusion.

Excellent dissection. Are you sure you weren’t a biologist in a previous life? That said, the agency pricing structure, IMO, has done as much good for Indie authors as Amazon has. Because of the Big 6’s desire to squash the ebook market by charging exorbitant prices for their books, Indie authors have been able to gain traction with reasonable prices and quality products (in many cases at least). If Amazon had been able to continue heavily discounting the ebooks from the Big 6, readers may have had no reason to turn to a tidal wave of newcomers.

Great article. I laughed aloud at Turow’s claim that readers are far more adventurous in stores than online. As someone who worked in a bookstore for six years, I found most repeat customers never strayed from their self-chosen sections. We had a high rate of theft from the self-help section because people often didn’t want to interact with a salesperson while purchasing books about intimate issues. I saw lovely trade editions of novellas languish because “they look so thin,” In the era of super-sizing, a physical book really is judged negatively if slender. Now novellas and short stories are doing well as ebooks because readers are taking the time to process the concept and perhaps read a sample rather than just walk away.

Also, at least on Amazon, its easier for readers to be adventurous because they aren’t being shunted toward a certain conclusion. Why browse through Romance for a new author when there’s a gigantic “dump” of the new Nora Roberts right beside the front door? If the entire suspense backlist has been spined-out to make way for the latest James Patterson collaboration, many readers will just go toward it. These physical cues exist for a reason — they work.

I started buying a few thrillers and historical novels since I went to ebooks. Why? Because I always wanted to read some but they were hard to find lumped into the general fiction section at most bookstores. Since I knew fantasy and sci-fi really well, I stuck to that section for my fiction needs.

I didn’t know that. Can you point me towards some data that supports that?

As someone who worked in a bookstore for six years, I found most repeat customers never strayed from their self-chosen sections.

Just like bookstores, the overwhelming majority of fiction sales on Amazon are in only two genres: romance and mystery/thriller. I live in a city that holds the world’s largest independent bookstore: Powell’s. I know several people that work there, and they uphold this fact. And, they all seem to agree that–again, overwhelmingly–customers tend to buy the cheaper and discounted books. Lastly, they all agree that the chief reason people visit the bookstore is for the visceral experience–they want to browse books, touch and hold them, and spend time there.

James, only unscientific, as you quite rightly point out. My three novella length novels are selling well. Short stories and novellas by friends of mine are selling well. We are cutting back dayjob hours for the first time in our lives, and that’s different for me and for them.

But it’s not scientific, only an anecdote, as you so correctly point out.

I also can only give anecdotal evidence of short stories/novellas doing better in ebooks than in physical books – but I see it quite frequently in comments on “big” author/publishing industry blogs (JA Konrath, The Passive Voice; etc). For example, when Jackie Collins decided to self-publish a collection of short stories because her publisher was telling her short stories weren’t selling, where were comments around the web from self-publishers laughing at that since they were able to (insert story of paying off large bills or their actual earnings off of short stories; etc). It’d take much more effort than I’m inclined to do to track down all these instances, but they’re there to find.

I’m one of the instances C.R. alludes to. :) My short stories are selling very well. So far, I’m on track to make as much as my trad-pubbed novel advances on EACH STORY within a year. This is in Romance, which may be an anomaly, but I see a lot of self-published authors selling a LOT of short stories and novellas in that genre. :)

PS — please excuse the repeated phrases and typos (including the mysterious “novel-length novels,” what a concept! — in my reply above. I really must accept I can’t cook dinner and post coherently at the same time.

Standing ovation, David Gaughran! What a clear and compelling case you have made. Thank you for speaking out.

I’ve been a fan of Scott Turow since reading the memoir “One L” about his first year at Harvard Law — he was part of the inspiration for my going to law school. And of course I’ve read his novels too. I couldn’t be more disappointed in both the stance he is taking and his willful misreading of the current state of publishing.

Just like traditional publishers, he’s trying to hold on to the goose that used to lay the golden eggs… for him and for those few writers deeply established in the paper firmament.

Things are changing, Mr. Turow. And those of us who have found entrance with our work into this brave new world of electronic publishing are discovering that it’s easier than ever to make a living writing.

Scott Turow isn’t advancing the interests of writers and he certainly isn’t advancing the interests of readers. So who is he representing? Writers of paper best-sellers who are losing the income they have counted on for years?

I’m not afraid of having my books on the virtual shelf beside yours. I’m finding readers myself! There’s plenty of room for all of us.

It’s called competition, Mr. Turow.

Patrice Fitzgerald
Attorney and author of the political thriller RUNNING

In bookstores, readers are open to trying new genres and new authors: it’s by far the best way for new works to be discovered.

For years bookstores colluded in driving the publishing industry. People complain about the big 6, but Barnes & Noble were most often stocking books by writers with a proven sales record. The result was that agents and editors had to conform to this model. Chain bookstores are hardly a paradise of free expression. Enter: self-publishing, which is.

Chain bookstores are hardly a paradise of free expression. Enter: self-publishing, which is.

Add to that how stale some genres became. In Sci-Fi, the ‘old guard’ had to approve a new story for it to be published. That inherently means a homogenization of what was available… No wonder SciFi went into decline. The genre has experienced a tremendous rebirth thanks to self-publishing. And that includes a HUGE number of sub-genres:
Space-Opera
Steampunk
Cyberpunk
Military SciFi
Scientific Romance
Alternate History
Science Fiction mystery (this genre has exploded in variety, quality, etc.)

Now, I picked my favorite genre (Sci-Fi). But I know its probably #3 (at best) on the genres that have benefited from self publishing.

In my own primary genre – historical fiction – I was told by a large amount of agents that nobody would read a historical novel set in South America. Now, I talk to a lot of readers (and I am one myself), and one of their key gripes (about pre-Kindle days) was that all the books coming from large publishers were the same. In historical fiction, they tended to stick to the same settings and eras (the Tudors, Napoleon, the Romans, the Civil War etc.). Now, I’ve no doubt there are good commercial reasons for this, but I strongly believe that there was a large segment of the market not being served by this narrow approach. My historical novel is now published, by me, and it’s finding readers and adding to the diversity of settings available to fans of historical fiction. Online bookselling and self-publishing has clearly added to that diversity in a huge way. To argue otherwise (as Turrow does) is nothing short of ridiculous.

David,
I agree, there were large segments not being served. What I wonder is how many of those segments will prove larger than the over-served other historical fiction segments?

To argue that variety doesn’t expand the market is… well we’ll keep to family words. ;)

Historical fiction is definitely one of the genres that have benefited by self publishing. I’ve read stories in the old favorites (Rome, WW2, C+ivil War) but also in new areas (Babylon, your “A Storm Hits Valparaso” in South America, and a few others).

Wow David that was a bitchslap of the highest order. As I was reading the idiotic statements of Mr. Turow, I found my inner voice shouting at the computer screen, first at what malarkey Turow was spreading and next at you to say this, this and this as a rebuttal. You didn’t miss a beat.

He also said this: Q: What do you think about Amazon publishing its own authors?
Turow: I refer to Amazon as the Darth Vader of the publishing industry. I am very concerned about what they do. When I went to law school, I thought that kind of vertical integration, where the book seller also becomes the book publisher, I thought that was supposed to be against the law, but you know, it’s supposed to be an anti-trust violation, but I guess the anti-trust laws have evolved in a way that I haven’t thought of. Link: http://oakpark.patch.com/articles/amazon-is-the-dark-vader-of-the-publishing-industry-and-other-thoughts-from-author-scott-turow

He may have gone to law school, but his grasp on anti-trust is terrible. Please tell me he doesn’t practice law. Amazon as a publisher doesn’t imply a turst. Who are they in trust with, thousand of authors as varying suppliers who price their works differently and offer them at other sellers? Nope, that doesn’t qualify. Maybe because they’re a monopoly, like I’ve seen editors, agents, and writers whining about lately? Well, 60% of the market is 40% short of a monopoly.

And I bet he doesn’t have the least problem with agents as publishers.

What bewilders me about the Amazon problem: Why would all of these companies raging and complaining about the apparent ‘monopoly’ doing things to make their vertical monopoly on their products that much easier? That’s the opposite of how smart competition should be operating.

I don’t know about Mr. Turow’s planet, but, on mine, “vertical integration, where the book seller also becomes the book publisher”, happens all the time in legacy publishing. With the law’s blessing. In Italy, where I live, major publishing houses such as Mondadori, Rizzoli and Feltrinelli also own large nationwide book chain stores. Is Italy an exception?

Excellent analysis, as usual, David. The real problem for the Big 6 right now is that they’d been gaming the system for so long they no longer know how to play it straight. Since the big mergers in the 80s and 90s, publishers have based their business model on blockbusters. As long as they controlled supply, distribution and product placement, they THOUGHT they had a lock on the business (but were any of them paying attention to the DEMAND side of the equation? I suspect not). Online selling doesn’t allow for the gaming they were so adept at (manipulating the major bestseller lists and purchasing “bestseller” slots in retail outlets). Mega-bestsellers are going away. The AG, and authors like Turow, who benefited from publisher gaming are in a position right now of soccer players showing up on game day and being told by the officials they have to now follow the rules just like everybody else, and no, they are no longer allowed to bring shotguns onto the field.

Wow.
I’ve never read any of Scott’s work (my wife has a few of his books on our shelves). If his plots contain the same poorly thought out structure as this letter, I think I’ll pass.
He contradicts himself and assumes we wont notice?

Amazon will crush us!
Amazon is dying – yay!

Scott, remember the old rule – if you put a gun on the mantle in act one, make sure it doesn’t fall apart and dissapear…

I read Mr Turow’s letter yesterday and boggled at his ability to overlook (in his own interest) a possible crime, and the sheer self-serving smugness of his tone. Thank gioodness this man does not speak for indies.

Thanks for a masterful and clear dissection.

PS. I know Americans are capable of putting men on the moon, but even they, surely, can’t build a bookstore out of ONE brick? ;>)

Thanks Jan (and everyone else). I’m planning on releasing Let’s Get Digital 2.0 (2nd edition) in the summer some time. The first section (on the state of the publishing industry) needs a little updating, and there’s lots of new stuff I plan to add (but keeping much of the old stuff, including the success stories).

Smashingly said, David, thanks because it needed to be said! A real delight to read, I was cheering at everyone of your sentences. It’s amazing how utterly off base Turow is. Total misreading of the reality that authors face…I guess this shows you what success will do to you! Makes you addicted to the status quo and so blind you can’t see what’s happening around you.

I agree with you: he definitely shouldn’t be president of the Authors’ Guild. It’s a disgrace. He should resign, that would be the only proper, dignified thing to do…

I particularly agree with Sarah’s comment about what Turow’s post reveals about his feelings about indie authors (or readers for that matter). As a woman who entered a male dominated profession and chose to teach in a community college rather than a university, I am used to being either invisible or dismissed as second rate by my peers, particularly by the officials of the professional organizations that were supposed to represent me. (But at least I was allowed to joint those organizations!! (Unlike the Author’s Guild). I wonder if pressed would Turow protest that some of his best friends are self-published authors??

His blindness towards the reality that most writers faced and still face within the traditional publishing system, his clear identification with publishers rather than writers as a whole or readers, and the tortured logic he had to use to defend traditional publishing (which David so beautifully deconstructed), all suggest that the Guild needs to find a new leader if it wants to play any significant role in the future.

And I whole-heartedly second the list of 3 things the Guild should be working on that David listed at the end of the blog post.

M. Louisa Locke,
author of Maids of Misfortune and Uneasy Spirits
and member of Historical Fiction Authors Cooperative

“Selling frontlist titles at a loss has been common in print bookselling for a long time (by Amazon, and several other retailers).”

Really? The only time this ever happened, to my knowledge, in bookselling was when Amazon and Wal-Mart got into a fight on Black Friday deals two years ago and they dueled to see who could sell Stephen King’s “The Dome” and other titles at a loss (they paid the publisher $12-13, sold the books at $9.99). Barnes and Noble, Borders, and Amazon all regularly discounted frontlist/bestsellers, but never discounted those books to below cost (as far as I can tell). Therefore, it *was* a bombshell that Amazon would be taking a loss on the sale of every $9.99 Kindle ebook in order to speed the adoption of the Kindle (both the device, and the .mobi format).

“Unlike you, Mr. Turow, I actually am a new author and I can tell you that things got a hell of a lot easier over the last couple of years. Instead of wasting my time sending queries to agents who never read them and don’t bother responding, I’m publishing my own work, reaching readers, and making money. No company has done more to make the self-publishing path viable than Amazon.

The increased viability of this path is the most positive development for authors in recent memory. Even those not keen on the self-publishing path are able to use it as leverage to seek better deals.”

THIS!

I, too, have benefited greatly from self-publishing. In fact, I can guarantee that I’m now making more money than most traditionally published mid-list authors I know. These are well known names in my genre selling hundreds of thousands of books, yet they can’t support themselves on their writing. I can. Because Amazon gave writers that chance.

“I actually am a new author and I can tell you that things got a hell of a lot easier over the last couple of years. Instead of wasting my time sending queries to agents who never read them and don’t bother responding, I’m publishing my own work, reaching readers, and making money.”

This made me want to pick up a banner and follow you over the top into no-man’s land. Keep blazing a trail, David. I was first exposed to the term “indie” by your work – can’t thank you enough.

You make many good points here. However, having also read Mike Shatzkin’s take on this, I do feel self-published authors have some reason to be concerned. Right now, self-published authors own the $2.99 price point. What happens when bestsellers start selling at that price as well?

Readers of bestsellers will be able to afford more books, of course. : )

Also, bear in mind the disparity of overhead expenses between a large traditional house based in New York versus a small mom-and-pop operation run out of someone’s second bedroom. Yes, both entities need to produce a certain amount of revenue to survive, but I would argue that the mom-and-pop operation can generate equivalent content for considerably less money. Additionally, more space may open up for small to mid-sized publishing companies that can do more with less in this new ePublishing environment.

If authors rely on cheap prices, I feel sorry for them. There’s always someone who will go lower. Just look at freelance writing. The price dropped to extremes like $5 for 50 articles instead of the usual $50-$500 per article! Once you get to free, what next?

People are charging more and getting good money from high sales. A cheap price doesn’t guarantee sales. Sell off your talent instead of a cheap price. Self-published authors don’t own $2.99. Yes, I’m self-published too.

I think neither large publishers nor Amazon would be willing or able to subsidize all those $9.99-$14.99 books at $2.99 permanently. I can see some discounting without Agency, I can see a lot of price-pulsing, limited time sales, special offers, daily deals, and so on. But that will only be a small percentage of titles at any one time.

Even with Amazon’s help in the form of swallowing a good chunk of the cover price, large publishers can’t run their entire catalogue at indie prices. We will still have a pricing advantage, albeit somewhat reduced. My hunch is that will be offset by the increased amount of readers that lower prices would bring into the fold.

I think there is something to the statement that Amazon is allowing authors to earn an income. I *finally* published book/ebook sales through December 2011. The trend indicates a gap between AAP ebook sales being reported and the overall ebook growth. That greater and greater market share for self-published books.

The author’s guild has long been a good old boys club of established writers who did little to help other writers. Of course Turow wants to keep the status quo. Lots of cavalry officers wanted to keep their horses.
Turow has been coddled by publishers since his break out debut and has no idea what it’s like for 99% of authors who aren’t “Brands”. Spend some time in the trenches and he’d been singing a different tune very quickly.

I’m not sure what the point is. This discussion is not about the merits of the Hagens Berman class action law suits (I’ll leave that to the courts, who seem to think there is enough evidence for the action to at least proceed). Rather, this discussion is about the campaign that the head of the Author’s Guild is waging for the Justice Department to drop their investigation into (alleged) collusion to fix e-book prices by the five largest publishers and Apple.

Also, off the top of my head, I don’t *think* I’ve made any comment as to the merits of the investigation itself, other than to note what is quite clear: Agency has resulted in higher e-book prices for readers.

Scott Turow is calling for the investigation to be dropped, before it can be established whether the alleged collusion to fix e-book prices has actually taken place or not. He seems to be relying on a characterization of the e-book and print book marketplace, and Amazon’s actions in that marketplace, which I roundly disagree with.

I don’t agree that the Justice Department should drop their investigation, and I don’t agree with his logic for calling for them to do so.

Rather, this discussion is about the campaign that the head of the Author’s Guild is waging for the Justice Department to drop their investigation into (alleged) collusion to fix e-book prices by the five largest publishers and Apple.

Dave, Turow posting an op-ed piece hardly qualifies as a “campaign”; if it does, then I’d say your post (which also appears in the comments section of turow’s piece) is a “campaign” too.

We’re in danger of getting into a hair-splitting competition here, but he wrote an open letter in his capacity as President of the Author’s Guild, to which I, as a grunt writer/hack/self-publisher (delete as appropriate) responded.

I’ve a question for you. Leaving aside the issue of whether you think any collusion took place or not, do you think Turrow is right? Do you think the matter should simply be dropped without the investigation being concluded?

I’ve a question for you. Leaving aside the issue of whether you think any collusion took place or not, do you think Turrow is right? Do you think the matter should simply be dropped without the investigation being concluded?

I think the real question is: does it matter? And my answer is–no, it doesn’t. I’m not sure if that counts as agreeing with Turow or not.

But again, Dave, you’re leaving out one glaring detail of the case: it’s a consolidation of over a dozen cases, many of which include Amazon–and the lead counsel, a law firm that’s in the same city as Amazon and cozy with it, wants Amazon off the target list. So I’ve a question for you: Do you think Amazon should be investigated?

If there is a potential case – sure. And if that happens I certainly won’t write any letter demanding the investigation be dropped.

I think you are confusing two separate actions though. One is the civil case – the class action suit – and the other is potential criminal case – the DoJ investigation.

In the former, Amazon was named as a party in subsequent actions that were filed after the initial Hagens Berman case. Those cases were consolidated with Hagens Berman named lead counsel. I don’t know if Amazon is still a party to the consolidated case, or whether Amazon will be when it finally goes to court. My hunch (if that matters) is that a case (about this specific matter) would be harder to make, given that it’s widely accepted that Agency was forced on Amazon. But we’ll see – and the courts will decide that.

In the latter, as far as I am aware at least, the DoJ aren’t proposing to sue Amazon – I haven’t seen their name mentioned anywhere (re. this specific matter).

As to any actions outside the two above, I honestly don’t know the details enough to comment. But I would take the same position on any matter – if there is cause/a potential case, they should be investigated – whatever the matter is.

The list of points I made above about the law firm are all true. For those who’ve been around the tech world for a while, this entire case brings a wry smile–because it’s part of a corporate chess game, not some melodramatic story about freedom and the American Way.

Again, no. You’ve got it wrong, including a misunderstanding of whether an antitrust case is civil or criminal (or both). But I’m sure that Turow–who in fact has done a fair amount of government legal practice–does have an understanding of it.

The cases are all of a piece, related. The lead counsel’s dogged pursuit of an investigation is what prompted a DoJ case in the first place. Turow, in fact, is talking about the case in the large, not as you described.

I’m no lawyer, and certainly unfamiliar with how such cases are particularly classified under U.S. law. But I just want to draw your attention to the the fact that Turow references the Justice Department’s investigation in the opening two paragraphs of his letter, and again in the final paragraph, and makes no mention of the class-action suit.

The cases may be “related,” but it does not follow that they are then the same case. They are being pursued in different jurisdictions, by different entities, with different defendants. They are two distinct cases that, yes, do address a lot of the same points and include some of the same players. Dave is absolutely correct, and your dogged determination to say he’s not makes one wonder why you’re so adamant to prove him wrong on something, ANYTHING. Could it be because his main points can’t be effectively contradicted?

Also, the past three years have seen several state-level antitrust investigations opened cocerning Amazon. Again, I encourage readers to look it up for themselves. Amazon has privately settled at least two significant antitrust suits in that period.

Okay, I looked it up. But I can’t find any facts to back up your statement. The anti-trust cases against Amazon concerning books are also investigations into Apple and the major publishers. Amazon is included because they used the agency pricing when forced to. In most of these cases, Amazon would likely be dropped if they continued. Perhaps you’re actually referring to several states who are suing Amazon to try to force purchases made on the site to include sales tax?

Either you didn’t, or you didn’t much–because the most recent case definitely did *not* involve Apple. The Booklocker case alone provides some insight into Amazon’s practices. And no, I won’t be getting into a link war on the topic–thinking readers can do their own research-and draw their own conclusions.

@techsavvywriter – I don’t believe most of these folks believe Amazon is a soon-to-martyred saint in the publishing world. For me, the point of David’s post is more the willful ignorance of Turow. Some of the statements in his letter are mind-blowingly unrealistic. The one about bookstores encouraging readers to expand their horizons is transparently ludicrous to anyone who has ever stepped into a bookstore.

Amazon is not a saint, the Big 6 and Apple aren’t the devil either. The industry is in the middle of change and upheaval, however, and Turow’s response to it is just an example of how out of touch with reality some folks are.

What possible benefit would it provide for Turow to be “wilfully ignorant”? I noticed this same kind of ove the top hyperbole when the AG sued Google over attempts to usurp copyright and post books online at will. Turow wasn’t president then. What’s most troubling to me is the melodramatic framing of the struggled in publishing today, and the myopic telling of the tale as one of freedom vs. oppression. But maybe that’s what us writers do.

I can’t think of any benefits to being willfully ignorant, yet people do it every day, otherwise why would we all understand the metaphor of the ostrich sticking his head in the sand? I suggest Turow is being so because I can think of no other reasoning for some of the statements he made.

Melodramatic? All I see here is a reasoned discussion. Freedom vs. oppression? Nah. What happens in this conflict has little to do with either of those. What it will do, however, is impact the livelihood of thousands of people, much like the changes in the music industry over the past decade. Some adapt, some don’t.

Honestly, I don’t care about Turow. I don’t have to agree or disagree with him–but neither do I have to caricaturize him. What I do care about is watching self-published authors (and those thinking about it) fall prey to lazy, uncritical thinking about the business they’re in–and fall prey to making it an emotional issue that require a fistful of hyperbolic adjectives.

This article seems over the top even for Dave–it’s angry, Konrath-like, dismissive, and aimed at–what? The Author’s Guild? Dave is quick to say he’s also “critical” of Amazon, but let’s face it–this is Dave defending Amazon and Amazon’s model against all critics.

Here’s my opinion, which doesn’t require emotion but I could put some in if I wanted. Amazon has made me money and empowered me. The Author’s Guild, Turow in particular, belittles what I do. So yeah, I’ll defend Amazon. You’ll probably counter with some sort of Amazon could go all evil on me. Yeah, they could. Corporations are in it for profit. But big publishing did nothing for me. Author’s Guild President insults what I do and makes ridiculous statements that can’t be backed up.

I guess what I reacted to about the letter wasn’t so much an Amazon thing. To be honest I really didn’t see the significance of mentioning them, but Turrow did. What I dispute was Turrow who is supposed to be a spokes person for authors becoming a mouth piece for publishers and bookstores. And he very loosely points out how this is supposed to benefit authors. I would think he should be spending his time fighting for royalty transparency and contracts that protect authors from bad agents and publishers. Instead authors are stuck lurking around the web trying to figure out the truth of things.

Turrow figuratively blushing for the injustice of a criminal investigation is an insult. If he felt that way privately fine, but putting the AGs face on a very biased opinion is wrong.

As opposed to Turow’s sober expressions such as “bombshell”, “predatory pricing”, “chokehold” and “destroy bookselling”?. This is a blog by a fiction writer, not a scholarly journal. It’s okay to be opinionated. Why can’t a writer use caricature and other rhetorical devices? David’s and Konrath’s articles do include facts and critical thinking, which legacy publishing supporters consistently ignore (17.5% vs 70% royalties anyhow?).

The core point here for me is not some proxy battle between Amazon and Apple or the publishers. The head of the Authors Guild is calling for the halt of an investigation into suspected criminality, collusion to fix prices, the result of which has been to artificially inflate the prices of e-books. If I was purely acting in my own self-interest, I would keep my mouth shut – Agency hands self-publishers like me quite the competitive advantage in pricing – but I think this is wrong.

The above focuses on Amazon purely because Turow’s characterization of Amazon’s practices form the basis for his call for the Justice Department to halt their investigation. (And really, halt the investigation? Stop it before we even find if criminal activity has taken place? It’s ludicrous!)

Great post, David. I’d send the following letter to Scott Turow, but I doubt that it would reach him. Hope you don’t mind if I post it here.

Dear Scott,

You won’t remember me but I once took a writing class from you. You were an excellent teacher. You are an excellent writer—PRESUMED INNOCENT is one of my all-time favorites.

But an excellent proponent of new genres and new writers? Not so much.

My so-called genre is a quirky mix of forensic mystery and ecothriller. I had an excellent well-established agent who tried to sell the first book of my series. A few editors loved it but didn’t know what to make of it. A few didn’t love it (I have no quibble with that; tastes vary). However…HOWEVER…at least half the editors who requested a look at the manuscript never bothered to reply to my agent. She followed up; they stonewalled. Finally, frustrated, she suggested I take the book Indie. She is a genius.

I now have two Indie books available in my series. I’ve found readers. I’ve gotten (mostly) good reviews. My 70% royalties are paying for the groceries and a few dinners out and I can hope that at some point I’ll be earning a living with my books.

Scott, you say: “In bookstores, readers are open to trying new genres and new authors: it’s by far the best way for new works to be discovered.”

I’d be delighted to see my books in bookstores. I like bookstores. But it didn’t happen.

What did happen was the ebook revolution. Every single one of my readers found my books outside of a bookstore. My readers judge the quality of my books. I respect that immensely and strive to produce the highest quality books that I can.

Scott, we’re both authors, albeit in radically different situations. But don’t we share that need for readers—that respect for readers? So why do you advocate against Amazon, the one company that has done more to open the reading market to new authors than any other company has done?

And why do you advocate against Indie authors? You once taught fledgling writers to improve their craft and find their way in the writing world.

It was sad for me to read that Turow has become such a stooge for the Big 6 publishers seeking to protect them from the DOJ and price fixing and also save the world from Amazon’s predatory practices. Such as lowering the price of books and encouraging more people to read books–clearly something must be done to save authors and the culture of our civilization from this Amazon scourge of mankind and please we must save Turow’s publisher from all the stupid decisions they have made. They had to collude with Apple for a better margin.

Let’s save all pubishers while we are at it–because that’s the important thing to do…the right thing to do for mankind. Amazon has made it so disgustingly convenient and easy to buy books that something must be done to stop it. Wherever will this lead to? This will cause the very downfall of our great human legcy of publishing.

Readers should have to earn the right to buy a book and not simply click and buy them online from the comfort of their homes. They should have to get out into the car and traffic and find a bookstore and trudge up and down the aisles and buy books from the small selection bookstores offer and pay a high price and they should be happy for what books the publishers deem to publish. That’s the way it has been and that is the way is should always be.

“At this stage, I don’t know if Mr. Turow is being deliberately disingenuous, willfully ignorant, or just letting his inner Sophist run wild. The claim that the Agency Agreement is responsible for Amazon’s share of the e-book market falling from ‘about 90% to roughly 60%’ is ridiculous.”

I’d like to point out that he didn’t, in fact quite make this claim, which leads me to believe it is a deliberate, and very careful, disingenuity.

I think you’re getting caught up in the hype. You wrote in response to Turrow’s claim about discounted e-books killing print:

“Amazon’s policy of discounting one product (e-books) was making it uneconomic for physical bookstores, who sell a completely different product (print books), to keep their doors open? Let’s just pause for a moment and ponder the ridiculousness of that statement.”

It’s not ridiculous at all. PCs and typewriters are completely different products, but the former made the latter obsolescent in a matter of a few years. It’s also reasonable to assume that Amazon intended to draw customers to e-books and their e-readers and away from bookstores by discounting the price of e-books. Amazon is a profit-making enterprise, after all; what other motivation could it have had?

In fact, there’s nothing especially inaccurate in what Turrow says. The real problem is that he’s trying to portray a perfectly rational business strategy as a sinister conspiracy because he’s on the losing end of it. But then he’s a lawyer and it’s his job is to defend his clients—who, in this case, appear to be traditional publishers.

I hear what you are saying, but my point was this: look at the timeline Turrow is referring to when he makes those points. We are talking about the landscape at the introduction of Agency. At that time e-books were posing no real threat to physical bookselling (they were less than 4% of the market). Physical bookselling was already in trouble long before e-books came along. My point was that to say Amazon’s policy of *e-book* discounting was the source of those woes is extremely inaccurate. And to say they were the cause of Borders’ demise is plain wrong.

At that time Amazon was posing more than a threat to paper sales at bookstores—it was putting them out of business. The fact that the e-book bomb hadn’t hit was beside the point. When you’re a business insider watching what the competition does every day, Amazon’s move to price e-books below paper ones doesn’t strike you as some unrelated event, it’s manifestly obvious to you that it’s the first salvo in a war for market share. In other words, when you’re in this situation, you know, and Amazon knows you know what their price points mean. So, sure, Amazon’s e-book pricing wasn’t affecting them at that very moment, but it was clear to everyone involved that it was meant to grab market share by getting people to switch to cheaper e-books—and it did have the intended effect.

So was Turow eliding the facts? Yes. Was he exaggerating? Yes. Was what he said ridiculous, even in the context of the time? Not really, because (1) Amazon was killing bookstores on paper books and (2) their price points on e-books were meant to convert people to electronic books at the expense of paper.

Put another way, you and Turow are each telling a different David versus Goliath story, while the real story is just Goliath versus Goliath.

It reminds me of the executive from the record company who told Brian Epstein that he wouldn’t sign up the boys from Liverpool because he believed that bands with three guitars and a drum were going out of fashion. I expect he ended up selling shoe-laces somewhere. And then along came velcro. Great blog, Dave.

There’s another fundamental problem that most critics of Turow–and even Turow himself, in parts–are ignoring: ebooks are LICENSED, not SOLD. You never, ever “own” an ebook–like software, you only pay a fee to license it. Those payments that ebook sellers get? They’re your cut of licensing fees.

And all of this, folks, is another reason why I believe ebooks will all be 99 cents or free within a few years. Like the disruptive app model, you’ll make the real money in advertising and “upgrades”. It’s going to blindside the self-publishing world like a speeding truck.

1) Licensing: Software is licensed just the same as e-books. Anytime you buy a copy of MS Office or Windows, you’re licensing the product from Microsoft. Software companies like Microsoft restrict the number of times their product can be installed on a computer. Ebooks are intellectual property, so there’s no reason why they can’t be licensed like many other forms of intellectual property. Licensing is part of e-book technology and there’s no law or rule that makes that wrong or immoral. You just have to know what you’re signing up for like any other product.

2) Advertising: A key distinction you’re forgetting is that web advertising is often used as the main mechanism to generate revenue in the absense of another way for tangiblble/intangible product/service being able to. Google generates money from ad clicks because that’s the main way it can support its search engine service. Self-published writers are making good money through ebooks not because of great ads placed on the product page, but because customers are buying their product. Go to any ebook page on Amazon and you’ll find the only products advertised are Amazon products. Those adds aren’t generating ebook revenue, they’re inviting customers to consider buying other products/services. The argument that ebooks will eventually be free and supported only by ad-revenue doesn’t hold much water.

Aron, I’m utterly confused by your comment. The first point was essentially exactly what I said–that ebooks and software are licensed in the same way. And all software companies *don’t* restrict the number of times you can install a software package on different devices. The ones that do only require a license fo each installation–or as is more common in business, some other arrangement like buying “seats”.

But my point about ebooks was that the prices being discussed are the prices of *licenses*, not of actual books. Your Kindle is full of licenses, not books. You never own the copy of the book, unlike the print world.

And the second point’s what I said too. If I’m misunderstanding, can you help clarify?

James,
My apologies on the first point. The way I read your comment, I thought you were stating that ebooks are licensed while software is owned outright without license. My mistake. I will say however that in some cases companies like Microsoft actually do restrict the number of times a piece of purchased software like MS Office software can be installed/re-installed on the same computer or different devices. I agree that a Kindle is full of “licenses,” but that’s part of what a consumer is signing up for when they join the platform and whether or not that’s superior/inferior to owning print books is a matter of personal preference.

My second point (if I understand yours correctly), disagrees with your statement that ebooks will eventually be 99 cents or free and that advertising/upgrades will support ebook revenue in place of ebooks themselves. I don’t think there will be a blindside because all the facts relating to ebook revenue are already on the table for all to see. Ebooks profitably support themselves through direct customer purchase and don’t lean on ad revenue to support their existence whereas your point argues that ad revenue and upgrades will be the main source of ebook revenue. That’s where we disagree.

You keep hammering on this point as thought it were relevant; it is not. What you are doing is asserting a false dichotomy whereby “The defendants in this case are guilty of antitrust” and “Amazon has been guilty of antitrust” are mutually exclusive statements; they are not. Proving Amazon is sometimes the bad guy doesn’t make Apple et al the good guys.

“Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90% to roughly 60%”

isn’t on solid ground.

You point to the entrance of competing ebook readers into the market during that time as somehow a contradiction of Turow’s point. But the foothold that B&N, Apple, and other ebook retailers have gotten in the market is directly related to the agency model. Ask B&N whether they could possibly endure a long battle of loss-leader pricing with Amazon, if the agency model goes away.

And on the flip-side of things, how about we ask Amazon to reveal whether or not the agency-model pricing has harmed in some demonstrable way the sales of the ebooks priced in this manner over the last two years? I know that it has reached the level of axiomatic common sense that those prices have deflated ebook sales, but why not allow the data to be carefully scrutinized by an objective third party to see what, exactly, the buying patterns actually say about the agency model? You yourself point to the phenomenal growth of ebook sales over this period. Could it be that consumers aren’t behaving in response to agency-model pricing in the way that everyone who writes about these matters presupposes?

But the foothold that B&N, Apple, and other ebook retailers have gotten in the market is directly related to the agency model.

I agree, and it’s stunning how readily folks are ready to say it isn’t true.

but why not allow the data to be carefully scrutinized by an objective third party to see what, exactly, the buying patterns actually say about the agency model?

The inconvenient truth that scurinty will provide is why the antitrust “issue” is mostly nonsense–and why if there is a suit filed, it will become very uncomfortable very fast for Amazon when its asked to help the prosecution demonstrate why Apple and the “big six” are harming competition.

Could it be that consumers aren’t behaving in response to agency-model pricing in the way that everyone who writes about these matters presupposes?

In fact, consumers aren’t complaining about the pricing, and there’s no proof at all that they’re harmed by it or buying less because of it.

“But the foothold that B&N, Apple, and other ebook retailers have gotten in the market is directly related to the agency model.”

It’s not the agency model that made most customers say, “Gee, I’d like to buy ebooks.” It’s the availability of ebooks on accessible popular devices like Kindle, iPad or Nook that has done that. Most consumers couldn’t even tell you what the agency model is or who supports it. iPod/iTues was what first made MP3 downloads widely popular, not the agency model that record companies wanted. Agency pricing is a by-product to protect corproate profits in the digital revolution, not the cause of that revolution.

“The inconvenient truth that scurinty will provide is why the antitrust “issue” is mostly nonsense–and why if there is a suit filed, it will become very uncomfortable very fast for Amazon when its asked to help the prosecution demonstrate why Apple and the “big six” are harming competition.”

Amazon is not under investigation for price collusion like the Big 6 and Apple are and also has no burden in helping the DOJ prove their case. The comparison is apples to oranges.

“Could it be that consumers aren’t behaving in response to agency-model pricing in the way that everyone who writes about these matters presupposes?”

Consumers are behaving in a way that supports their wallets. They buy brand-name author ebooks, but they also buy a heck of lot, if not more, indie-published ones as well, particularly because the pricing is typically more affordable and the content is reasonable and not all garbage as the Big 6 would claim.

Agency pricing is a by-product to protect corproate profits in the digital revolution, not the cause of that revolution.
I don’t see where I (or the other fellow) were talking about a “digital revolution”. Myself, I was talking about the ability of those actors to sell books at a price that made it feasible to offer them in the first place.

Amazon is not under investigation for price collusion like the Big 6 and Apple are and also has no burden in helping the DOJ prove their case. The comparison is apples to oranges.
Actually, Amazon is–but the lead counsel wants them as a witness for the plaintiff, not as a defendant. If the DoJ agrees, then Amazon *does*, in fact, have a burden to help them (because it’s the law).

Consumers are behaving in a way that supports their wallets. They buy brand-name author ebooks, but they also buy a heck of lot, if not more, indie-published ones as well, particularly because the pricing is typically more affordable and the content is reasonable and not all garbage as the Big 6 would claim.

You almost had me, until you devolved into bashing. Of course consumers vote with their wallets. But they *also* buy products all all sorts of price points. If they didn’t, then everything would cost a dollar, wouldn’t it? And please, tell me: where can I find all of this writing where the “Big 6″ claim that independently published work is “garbage”? Do they all get together in a room and write press releases together? And if they do, why the heck are they snatching up authors like Amanda Hocking?

Speaking of the “Big 6″, folks–Amazon is now one of the largest “traditional” publishers in the land.

My point wasn’t that the agency model did something to push consumers to ereaders / ebooks. It was simply that the agency model made it possible for B&N especially, and others less centrally, to compete against Amazon on a footing that is closer to equal than it otherwise would be.

Do you really think the most valuable company in the world (Apple), with an estimated $80bn in cash reserves (or whatever it is), needed Agency to compete? Do you not think they could win a price war with Amazon if they really, really wanted to?

I think that those who think Agency caused Amazon’s market share to slip from 90% to 60% are confusing causality with contiguity. If I strike a match and somebody knocks on the door, my match-striking didn’t cause somebody’s sudden appearance just because the events were contiguous.

Far more important factors, in my opinion, were the ones listed in the above post. I won’t restate them, but will underline the following. The size of the e-book market at the introduction of Agency was approximately 4%. The market was so small that it wasn’t really that important who controlled it at the time. It wasn’t an insurmountable feat for a competitor to grab significant market share on entry as the market was at the very early stages (much in the way that Amazon were estimated to have grabbed a significant share of the Italian e-book market since entering it directly in December).

Pete,
Agency Model may have made it possible for B&N to compete, but the point is whether or not that Agency Model creates uncompetitive practices that favor the parties who pushed for them. Leveling the playing field through alleged illegal practices in not a justification for those practices.

It’s almost a year since the European Union raided the offices of several publishers in France, Italy, and Germany, kicking off their own Europe-wide anti-trust investigation – later folding into that probe a similar move by the Competition Authority in the UK to examine the Agency Agreement.

Antitrust cases in the US are created and dropped all the time. Some make the news; some don’t. Antitrust cases in the US are also often highly political, and helped along by interested parties on both sides. Nearly every major corporation in the US has been the subject of some sort of antitrust threat–including Amazon. It’s how it goes.

James,
You’re right that antitrust cases are created and dropped and I would agree with your sentiment about political motivations in some cases, but I wouldn’t go so far as to dismiss the mechanism itself. It’s rare for the gov’t to actually break up or significantly punish a corporation for anti-trust issues, but the point that’s missed is the fact that the act of anti-trust investigation often serves the purpose of warning a corporation that either has or is headed towards monopolistic behaviors.

Monopolistic behaviors aren’t automatically illegal–legal monopolies exist all over the world. Also, governments and legal systems are playing catch up to the digital world, and one of the ways they try to do that is by launching investigations.

James,
You are right that monopolies exist all over the world, but there are different types created and allowed to exist under law for a variety of reasons. If I understand U.S. law correctly, multiple companies colluding to fix prices at a certain level as the Big 6 and Apple are alleged to have done is illegal and shouldn’t be explained away because other monopolies exist. Investigating alleged price collusion is not a governmental attept to play catch-up in the digital world, is an investigation into a type of illegal activity that very old.

My reading of that article is that a settlement is *only* open to the publishers and Apple if they agree to certain conditions (which I suspect involve the dropping of Agency, or its substantial modification, and possibly also a fine of some sort – this is all guesswork of course, we have no clue what evidence – if any – the regulators have). I don’t see what’s so abnormal about that position, or how it trumps any of the above. I would imagine the position is somewhat similar in the US, i.e. that a settlement is *possible*.

The point of this post was to criticize Turow’s stance that the investigation should be dropped forthwith (and his ridiculous notion that we could never establish if collusion had taken place anyway), and to display his faulty reasoning for that position.

I’ve no problem with the EU or the DoJ coming to a settlement with the publishers, and Apple. That’s probably how it will go down. I think that will also spell the end of Agency though – certainly in its current form. But, we’ll see. I would imagine this whole saga has a few twists and turns yet.

While I have followed this discussion with interest, I have had little desire to get into antitrust issues that I have no expertise about.(And I think it has been said clearly over and over that most of the comments made by Gaughran and others are not in defense of Amazon as a business but in criticism of Turow’s defense of the Big 6 and his inaccuracies about the business, authors, and consumers.

I also do not have a clue whether any investigation is going to find that the agency model “hurt” consumers in legal terms. But to say that consumers aren’t complaining about pricing is just wrong, or to say that there is no proof they are buying less (books that are priced under the agency model) just seems to undercut anything you have said up to now because it reveals such a lack of awareness of what has gone on in ebooks purchasing in the last two year. See for example the campaign to give higher priced books one stars http://reviews.cnet.com/8301-18438_7-20051201-82.html or the growing domination of the best seller and popularity lists on Amazon by indie books (that are lower priced) as documented in the fine work done by Kevin McLaughlin http://kevinomclaughlin.com/2012/02/28/genre-surveys-part-2-science-fiction-and-fantasy-ebook-bestsellers-examined/ as just a few examples. I would love to say that indie books are selling better than traditionally published, but I know that for the most part it is because our prices are lower.

What this suggests is that if consumers haven’t been hurt (if the courts find that the prices of ebooks over all weren’t pushed up by the agency model) it will have been Amazon’s actions and the influx of indie authors that kept this from happening. I am not saying Amazon was altruistic here (in case you see this as a statement of defense of Amazon–which it isn’t) but instead I am suggesting that your apparent dislike of Amazon (like Turow’s) has led you to make statements that undercut your argument because of their inaccuracy.

But to say that consumers aren’t complaining about pricing is just wrong, or to say that there is no proof they are buying less (books that are priced under the agency model) just seems to undercut anything you have said up to now because it reveals such a lack of awareness of what has gone on in ebooks purchasing in the last two year.

Amazon’s sales of “agency priced” books has skyrocketed. What should we attirube *that* to, I wonder?

And of course I can’t say out of several billion people, some haven’t went to the Web to comment about prices. Interestingly, the first link you post is almost entirely about people complaining in the Reviews section on Amazon. Yet the book in question hovers in the Top 10 legal thrillers, and is selling like crazy. What does that mean, I wonder? I’ll tell you: it means everybody doesn’t buy products at the same price. There’s even an economic term for it.

The second link you provided? Again–all about Amazon sales figures. And, it’s about one of the traditionally smaller and more niche-focused genres: sci-fi and fantasy. The number of authors eking out a living in those has always been extremely small. It still is. That’s why authors in those genres are keen on trying *anything* to improve their chances. And they should.

…have in fact pointed out that indie authors may be the ones hurt the most by changes to the agency model-because Amazon’s smart decision to encourage the expansion of offerings by self-published authors is the reason that consumers haven’t “been hurt” or have bought fewer books–they have been buying indie books.

I’m not sure I understand what you’re saying. That “indie” authors are most hurt because Amazon expanded offerings of their work?

but instead I am suggesting that your apparent dislike of Amazon (like Turow’s)
I’m selling a book on Amazon right now. There’s plenty to dislike about Amazon–but then again, there’s plenty to dislike about Apple and *any* part of publishing, isn’t there?

“Amazon’s sales of “agency priced” books has skyrocketed. What should we attirube *that* to, I wonder?”

Maybe they are skyrocketing because Kindle sales are Skyrocketing. Maybe it is because many iPad users are buying from Amazon instead of apple. Maybe it is people reading on their iPhones or their android phones and tablets (including the kindle fire).

It is hard to look at these skyrocketing sales and know if it is simply the entire market expanding at a skyrocketing pace or because of something the legacy publishers are doing right, Personally I think the Legacy Publishers are succeeding in spite of themselves as I know that i personally won’t pay their inflated prices.

This morning I got my Author’s Guild ballot on changing the rules for membership to include indie authors who vault a certain financial earnings-bar. But worryingly, AG apparently hasn’t even set this bar yet, and we’re supposed to vote yes or no without even knowing who among us would qualify. I got my membership some years ago on the basis of a contract with Carroll & Graf who within a year were on such thin ice, they were subsumed by Avalon, then devoured by Perseus. There was even a class-action suit for non-payment of royalties in its wake.
I suspect AG’s rule reform is not so much a gate-opening but a gate-narrowing in anticipation of the need to change with the times but clinging to the elitism emanating from Turow’s piece. How ironic if the indie publishing earnings bar set by the AG membership committee turns out to be more than Carroll & Graf’s balance in the last year of its failed “legacy” existence.
Dinah Lee Küng (nominated for the Orange Prize for A Visit From Voltaire in 2004) and publishing the backlist of six novels under the indie imprint Eyes and Ears Editions.

I think it’s hilarious that Turow claims the market is harder on new authors now than two years ago. Maybe he means traditionally-published authors, but as for the rest of us, my novel A Soul to Steal has been on the Horror, Mystery and Thriller, Suspense and Ghost bestseller lists and been bought by thousands of people. Considering that two years ago, it sat on a shelf unseen by anyone, I’d say things are a lot easier for writers now than then.
Great post, David!

Excellent post David! I’m so glad I did not follow the traditional publishing route with my book I’m Fat, Help Me. The agents and publishers represent roadblocks and I’m thankful the industry is changing. Here’s a great example: The Help. The author was repeatedly turned down by multiple publishers and agents, and spent an inordinate amount of time reworking her manuscript. Most authors would not have persevered. Many of those publishers who turned her down didn’t know the book was a bestseller and movie in the making. Turow is trying to guard what he knows and the old publishing model.

I am an 18-year-old student who has been researching the dynamic between Amazon and publishing companies for a presentation. Perhaps I am biased because I interned at a publishing company last summer and loved my experience, but what bothers me most about the pro-Amazon sentiment is the fact that, as consumers, we are not looking far into the future, just as the publishing companies did not. Amazon is. Why would Amazon elect to lose money on every e-book and every Kindle that it sells? Because it gains more market share that way. And why would it want to gain market share? Maybe because it wants to monopolize the book industry (and every other industry it has touched) a la John D. Rockefeller and Standard Oil. Today’s authors are rejoicing over the higher royalties they are getting from Amazon, but what about tomorrow’s authors? What happens when Amazon has destroyed all the traditional publishers and no longer needs to compete using generous advances and royalties, the money that makes it possible for writing to remain a sustainable profession? After all, Amazon’s priority is not making books; its interest is in making money. The other option is, of course, self-publishing, but even the most well-written of books may be lost in the sea of mediocrity created by the loss of the gate-keeping, copy-editing, and marketing functions that traditional publishers now serve. If, one day, I choose to self-publish a book, who besides my friends and family will be able to discover it without bookstores in which to flip through new titles and employees to make recommendations? My conclusion for now is that I should definitely not be a writer as an occupation when I get out of college, a conclusion I cannot help but think many of my generation’s budding writers will arrive at, which would certainly be detrimental to the future of the “rich literary culture” Scott Turow talks about in his post. I think many are choosing to be blind to the path down which Amazon is leading us. If we are to truly admire Amazon for its accomplishments, perhaps we should follow in its footsteps and be more far-sighted.

Your comment: “After all, Amazon’s priority is not making books; its interest is in making money.”

True, but this is true of the Big Six as well. No one is out there for the betterment of mankind.

Your comment: “If, one day, I choose to self-publish a book, who besides my friends and family will be able to discover it without bookstores in which to flip through new titles and employees to make recommendations?”

I’ve had thousands of people buy my book. I don’t have that many friends, just trust me on that.

Your comment: “My conclusion for now is that I should definitely not be a writer as an occupation when I get out of college.”

If you want to be a writer, now’s a GREAT time. Before, you had to get someone from the Big Six to a) read your book and b) publish your book. Not anymore.

Yes, there are challenges. God knows this isn’t easy. But if I had this opportunity when I was 18, i would have jumped in and never looked back. I suspect most of us on this blog would say the same.

As it is, I’ve been a professional writer all my life. I can think of no better profession (for me, at any rate).

I appreciate your response. I would just like to clarify some of my points.

I am not going to deny that the Big Six is out there to make money. But Amazon is not invested in publishing books the way publishing companies are because publishing books is not its sole focus. Money is valued at the Big Six, but so is the written word. I cannot imagine that the same can be said of Amazon, which has fingers in so many pies.

I agree with you that now is a great time to be a writer because right now, writers have options, which, in fact, are not limited to the Big Six. There are many smaller presses, such as the one I interned at, that have published wildly successful books. But how about in the future, when there might only be Amazon? Thousands of people have bought your book, but will thousands of people buy one I might write when a greater proportion of the book market is self-published e-books? What will distinguish my book from the others? Who will sift through the dirt to pick out the gems? Certainly not Amazon. But if not Amazon, who else, if all the traditional publishers and booksellers are gone?

I guess my question to you is: who is doing that now? I’ve read indie books that were excellent and terrible. I’ve read traditionally published books that were excellent and terrible. I don’t think traditional publishers are necessarily helping their authors to be discovered — they are fighting for the same oxygen that the rest of us are. In other words: If the entire market were self-pubbed, I’m not sure the world would be that different. You would still have excellent and terrible books competing for attention. And the readers would ultimately be the ones to decide which is which.